China PMI July 2016

China: Manufacturing PMI falls into contraction territory in July

August 1, 2016

The Purchasing Managers’ Index (PMI) inched down from 50.0% in June to 49.9% in July, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), which publishes the index. The print came in slightly below the 50.0% reading that market analysts had expected and hit a five-month low. As a result, the PMI is now sitting below the 50% threshold that separates contraction from expansion in the manufacturing sector.

July’s reading reflected that new orders and production fell to their lowest levels in five months. Moreover, the suppliers’ delivery times category declined in the same month. On the upside, inventories and employment gained some ground in July, albeit they remained below the 50%-threshold. Input prices—a reliable leading indicator for producer prices—increased markedly in July, suggesting that deflationary forces are gradually abating. New exports hit a five-month low, signaling that global demand is still weak.

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China PMI Chart

Note: Purchasing Managers’ Index. Readings above 50% indicate an expansion in the manufacturing sector while readings below 50% indicate a contraction.Source: National Bureau of Statistics of China (NBS) and the China Federation of Logistics and Purchasing (CFLP).

Exports expanded 11.1% annually in January, coming in slightly above both December’s 10.9% increase and the 10.7% rise that market analysts had expected.
Meanwhile, imports surged to a 36.9% expansion over the same month last year in January, which overshot December’s 4.5% expansion.

The manufacturing purchasing managers’ index (PMI), published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), fell slightly to 51.3 points in January from 51.6 points in December.